How companies do business will often be more important in 2010 than what they do. New business models, according to 54% of respondents to a global survey of over 4,000 senior executives conducted between November 2004 and January 2005, will represent a greater source of competitive advantage in 2010 than new products and services. Products will matter, of course, but they are increasingly vulnerable to replication. Revisiting the business model—how products and services are created, delivered and maintained—will make the bigger difference, and firms will need to do this regularly. Technology will be at the core of efforts to achieve this: technology advances will exert the heaviest influence on business models in 2005-2010, according to 41% of survey respondents. And 87% say that information technology will be critical to their firms’ ability to adapt business models and implement strategy.

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Executive summary

The research conducted for the report series, which included a survey of 4,018 senior executives spread across 23 countries and more than 20 industry sectors, strongly suggests that flexibility and speed will be the hallmarks of the successful organisation in 2010. Following are the key messages of the reports in the Business 2010 series:

Revisit your business model—regularly.
Worldwide, more respondents identify new business models as a greater source of competitive advantage than new products and services. Products matter, but as a source of lasting competitive advantage, they are vulnerable to replication. Rethinking—at regular intervals—how products and services are created, delivered and maintained will make the bigger difference.

Be nimble, be quick. Instilling an adaptability to change and speed of innovation are the greatest management challenges that organisations face. As companies both push further into new markets—China and India chief among them—and seek to deepen ties with existing customers, a focus on innovation will be the hallmark of success. But innovation in products and services will not be enough: companies are coming to view the ability to innovate with business models as equally if not more important.

Know thy customer, and invite him in. Executives say that the way their organisations interact with customers will be the area of greatest change in their operations between now and 2010. Focus on customer retention is not new, but firms will seek to gain much greater knowledge of customer behaviour in order to better anticipate changes in demand. In this context, they will seek to involve customers more closely in many parts of the business, with implications for corporate networks and security.

Do what you do best. Three out of every five survey respondents see their major competitive threat as coming from the consolidation of existing players; the rest worry primarily about new entrants from emerging markets. Faced with pressure from above and below, the majority of firms plan to stick to their knitting by specialising in their existing or modified product lines.

To succeed, characteristics of flexibility, openness, collaboration and speed will be increasingly critical. Many of these attributes will depend on information technology (IT), which is regarded by more than 80% of respondents as critical to their ability to change their business models over the next five years. It is also coming to be seen as more of a competitive tool than simply a driver of cost efficiency.